Interest Rate Comparison Calculator Mortgage

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Rental Yield Calculator

Repairs, insurance, taxes, management.
Expected weeks/year unoccupied.
Gross Rental Yield
0%
Net Rental Yield
0%
Annual Net Profit
$0
function calculateRentalYield() { var purchasePrice = parseFloat(document.getElementById('purchasePrice').value); var monthlyRent = parseFloat(document.getElementById('monthlyRent').value); var annualExpenses = parseFloat(document.getElementById('annualExpenses').value); var vacancyRate = parseFloat(document.getElementById('vacancyRate').value); if (isNaN(purchasePrice) || isNaN(monthlyRent) || purchasePrice <= 0) { alert('Please enter valid numbers for price and rent.'); return; } // Calculations var annualRentPotential = monthlyRent * 12; var vacancyLoss = annualRentPotential * (vacancyRate / 100); var effectiveAnnualRent = annualRentPotential – vacancyLoss; var grossYield = (annualRentPotential / purchasePrice) * 100; var netProfit = effectiveAnnualRent – annualExpenses; var netYield = (netProfit / purchasePrice) * 100; // Update UI document.getElementById('resultsArea').style.display = 'block'; document.getElementById('grossYieldResult').innerHTML = grossYield.toFixed(2) + '%'; document.getElementById('netYieldResult').innerHTML = netYield.toFixed(2) + '%'; document.getElementById('annualProfitResult').innerHTML = '$' + netProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); }

Understanding Rental Yield for Real Estate Investing

Rental yield is a critical metric for real estate investors to evaluate the potential return on a property investment. It measures the annual rental income generated by an asset as a percentage of its total purchase price or market value.

Gross Yield vs. Net Yield

There are two primary ways to calculate yield:

  • Gross Rental Yield: This is the simplest calculation. It takes your total annual rent and divides it by the purchase price. It does not account for expenses like taxes, maintenance, or vacancies.
  • Net Rental Yield: This is a more accurate reflection of your actual return. It subtracts all operating expenses (maintenance, insurance, management fees, and vacancy allowances) from the annual income before dividing by the purchase price.

The Formulas

Gross Yield = (Annual Rent / Purchase Price) x 100
Net Yield = ([Annual Rent – Annual Expenses] / Purchase Price) x 100

Practical Example

Imagine you purchase a property for $400,000. You rent it out for $2,000 per month ($24,000 annually). Your annual expenses (property tax, insurance, and basic repairs) total $5,000.

  • Gross Yield: ($24,000 / $400,000) = 6.00%
  • Net Yield: ($24,000 – $5,000) / $400,000 = 4.75%

What is a "Good" Rental Yield?

While "good" is subjective and depends on the location, most seasoned investors aim for a net rental yield between 5% and 8%. In high-demand metropolitan areas, yields may be lower (3-4%) because investors expect higher capital appreciation (the property value increasing over time). Conversely, in regional or "riskier" areas, investors typically demand higher yields to compensate for lower growth potential.

Using this calculator helps you strip away the emotion of a property purchase and look strictly at the financial performance of the asset.

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